Tuesday, November 02, 2010

Chart Request - MasterCard Incorporated (Public, NYSE:MA)

MA has rallied 100% from its base (lower blue line). It has recently printed two distribution days, today and Thursday. Today's close breached the trendline. Preliminary support is the 20 EMA, followed by $230.00 (former resistance). Major resistance is $250.00.

The trendline is too steep to be maintained. Corrective trade into the two immediate support levels noted above would be constructive over the near-term.

I don't think your analysis was wrong. You sold ahead of earnings because the risk/reward was not in your favor. If the stock had gapped 10 points lower on the open, you would have thought yourself a genius for selling.

I had suggested buying puts as a hedge. If you had held with a hedge, you would have made money on the stock and the puts would probably expire, either way, you would be better off.

If I place my fibs from ORL to early morning high, the 10:35 5 min. bar retraced to the ambush zone and printed a hammer. Buy on break of hammer. Now ARUN has extended to the 1.618% level (currently trading at $22.83). Despite the fact that it was a little choppy, the outcome is classic ambush.

If you want to swing/position trade at this juncture in the rally, you want to buy pullbacks. Also, you don't want to buy ahead of FOMC and jobs data later this week. Both AAPL and MA are trading near highs of steep trendlines, so not good risk/reward at these levels.

The markets need to correct. Most traders, myself included are near all cash at these levels. Most breakouts are being faded in the last few trading sessions. So, I suggest you wait for a better opportunity.

May I ask where you put the initial stop when you long on the break of PDH in the trade of RIMM(10/26)? When your order was executed, you may have no idea what kind of the first 15min bar like. Maybe it will close like a Shooting Star and start reverse. Why you have the confidence to pull the trigger instead of waiting for a consolidation? Thanks.

I was confident because of the high volume BO the previous day. That volume suggested to me that RIMM was in a short squeeze. So I needed to get back in the trade as soon as possible because squeezes run really fast. I used the previous day closing low as my stop.

We likely see follow through rally in equities tomorrow. Not sure how markets will react to jobs data.

I'm not planning on initiating any new swings short-term except POT, which I plan to buy tomorrow on weakness following Canadian gov't rejection of BHP offer.

I had two BO longs in early trade MYGN and FFIV, but for the most part, today was best to buy support - RIMM and AGU long, and long ABX on FOMC.

The rally is too steep, if we don't correct soon, we may reverse sharply, when it finally runs out of steam.

Red flags are gold and $USD. GLD didn't fully recover from early weakness and $USD didn't fall as badly as I had anticipated. Maybe QE2 was already priced in. If that's the case, I would expect rally to correct sooner than later.